Company profits soar, but taxes MIA

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Company reporting season this year has extra interest. Yes, it will show shareholders how much they will pocket. But it will also reveal how much tax the Turnbull government is allowing the corporations to avoid.

Proudly annoying those in power since 2000.

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“So does Australia really have a spending problem? Or does it have a treasurer and finance minister problem”?

Why limit your finger pointing Alan? No mainstream media headlines; No Four Corners exposure; No political elites faux outrage etc etc. The Australian political compass that has stood us in good stead; allowed us to own values of “fair go”, mateship, pride in a national identity no longer trusted. Whether it be business, political, or any special interest elite; the Australian electorate continues to disconnect as we lose our raison d’etre. Power and greed has replaced unity.

Count the homeless living on the streets of our cities . . . . as your C’wealth/Corporate car passes by!

I am following up your piece about the taxation of property companies entitled “Company profits soar but taxes MIA”.

First, the question of taxation for large corporates, particularly those that operate across multiple jurisdictions is a legitimate one. Australian property and building are no different than any other sector in that we want successful companies to pay their fair share of tax.

But the issue you raise does not fall into this area.

When it comes to listed property trusts, tax is paid by the unit holders rather than the company – this ensures we don’t have double taxation. It doesn’t mean the company is avoiding or evading tax, it means that the actual owners of the trust (the unit holders) are paying the tax.

It also means that a unit trust investor is in exactly the same tax position as someone else who brought a property in their own name.

To get a little more technical, listed property trusts will typically be “managed investment trusts” (MITs) for Australian tax purposes. Under an MIT, the investors pay tax directly on their share of the passive taxable income of the trust. This tax is paid:

1) “by assessment” for Australian resident investors, which can be as high as 49% depending on their personal tax position; and

2) through withholding taxes for non-Australian resident investors at tax rates of 15% or 30% depending on the country of the non-resident investor.

As well, the Australian taxation arrangements for real estate investment trusts are consistent with most taxation regimes around the world.

All of this points to taxes being paid and not MIA for property groups – the same way as property taxes are being paid by Australians who own property directly.